Brexit and the future of immigration in the UK and EU

January 2018 | EXPERT BRIEFING | LABOUR & EMPLOYMENT

financierworldwide.com

Immigration played a central role in the Brexit movement – the recent rise in immigration was one of the defining arguments that united anti-globalists, eurosceptics and nationalists to vote the UK out of the EU. One of the goals of Brexit was to remake the UK’s immigration system, and arguably immigration in both the UK and EU will look very different once the UK leaves the bloc. The results of the UK’s withdrawal agreement and any mobility provisions will have significant impacts on European companies as they choose where to locate their businesses, how best to access global talent and how to move people most efficiently throughout their mainland and UK operations.

Brexit negotiators from both sides are currently hammering out the legal status of more than 3 million European nationals already living in the UK and approximately 1 million British citizens living across the EU. Those negotiations appear to be nearly resolved and would essentially allow current immigrants to register and accrue time toward permanent residency status.

But after the divorce is finalised in March 2019, the UK will no longer be subject to EU rules on the free movement of people and will be free to create its own immigration system. What will that system look like? And how will Brexit impact free movement in the remaining EU27 countries?

Under EU law, member countries are bound by the mutual free movement of people, which means that they may not impose visa requirements, work permits, quotas or other immigration restrictions on each other’s citizens – EU nationals are free to live and work in any EU country with full access to labour markets. In the decade leading up to the Brexit referendum in June 2016, net migration from EU countries to the UK soared. This increase was largely made up of lower-skilled migrants from eight newly acceded Eastern European countries, namely the A8 group of countries, comprising Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia, which joined the EU in 2004. The UK was one of only three EU countries (along with Ireland and Sweden) that decided not to impose labour access restrictions on citizens of the A8 countries, an option available to all EU members during the initial seven years of the new members’ accession agreement. Migration from the A8 to the UK thus rose sharply in the following years, with the number of A8 nationals in the UK multiplying more than tenfold from 112,565 in 2004 to 1.2 million in 2015. The number of EU14 nationals in the UK, by contrast, remained comparatively flat, rising from 620,185 in 2004 to 794,527 in 2015. Against this backdrop, Brexiters promised that a break from the EU would allow the UK to end free movement, take control of its own borders and tamp down on unwanted immigration.

The UK and EU now represent two divergent models of immigration. The UK is aiming to restrict migration from mainland Europe by imposing work and residence permit criteria on EU nationals, similar to the system currently in place for non-Europeans. Under current proposals for a post-Brexit UK immigration system, EU nationals would need to qualify for work permits based on their skills and would be deemed ‘low-skilled’ or ‘high-skilled’. Low-skilled workers would be eligible for temporary permits, either two or three years in length, but would not be eligible for residency. High-skilled workers would be eligible for five year work permits and could eventually apply for residency.

The EU approach represents a significantly more liberal stance. The EU Blue Card scheme for non-EU college graduates coming to work in Europe is far more generous than the UK rules for similar hires, and the EU directive on intracompany transfers (ICTs) provides much greater flexibility to multinational companies transferring personnel between affiliate offices than the UK’s scheme for ICTs, in terms of minimum salary requirements, minimum tenure and ease of movement among multiple EU countries. Brexit may also affect the immigration policies of Ireland and Denmark, which, along with the UK, have traditionally opted out of EU directives on immigration and visa liberalisation policies due to the provisions of the protocol of the Treaty of Amsterdam. Despite favourable consideration from the Joint Committee on European Scrutiny, the government of Ireland has chosen not to opt-in to the Blue Card Scheme to date.

Both the UK and EU models will face major challenges in the post-Brexit world. The UK is realising the difficulties of disentangling its economy from its reliance on EU labour. Private sector companies are growing anxious about being able to recruit and retain European staff, and some notable names have announced plans to defect. In the public sector, the beloved NHS (which Brexiters famously promised would gain funding as a result of Brexit) is critically dependent on nurses from other parts of Europe. Meanwhile, other EU countries may benefit from Brexit and are vying to attract businesses that are considering relocating outside the UK by liberalising their immigration policies. France, for example, is streamlining immigration rules as part of a modernisation of French labour law to aggressively compete for companies relocating their headquarters. However, the view from Europe is also foggy. The re-emergence of far-right anti-immigration political parties in recent elections in Europe, such as in Austria and Germany, have added to the uncertainty of whether the EU can continue to pursue liberal immigration policies and whether EU free movement as we know it will continue to exist beyond Brexit.

Ireland is also vying to attract foreign business to continue its economic growth and foreign multinational presence. However, Ireland is also singularly challenged by Brexit. There are ‘hard Brexit’ hard border fears and, in immigration terms, this manifests as concern regarding the Common Travel Area, which allows freedom of movement between citizens of Ireland and the UK, and in a post-Brexit world, must restrict free movement of citizens from the EU. This fear has been dismissed by Theresa May, with the suggestion that, for the UK anyway, the responsibility to prevent illegal working is with employers and is not contingent on borders.

Because of the common travel area, Ireland has opted out of many immigration directives, but this is likely to change without the need to act in unison with the UK, making closer integration on immigration matters possible. While Ireland has not yet implemented the Blue Card or ICT directives, it did recently implement the Posted Worker Directive, which could hint at a change in practice.

Emily King is the managing director for Europe and Aaron Flynn is a senior associate at Berry Appleman & Leiden. Ms King can be contacted on +44 (0)208 987 4101 or by email: eking@balglobal.com. Mr Flynn can be contacted on +44 (0)208 987 3830 or by email: aflynn@balglobal.com.